David Vs. Goliath

May 8, 2016

This particular blog was originally handed in for a grade by a Business college student Ben Gelman of NYU. Ben "wrote a paper that featured that BioPac’r as a solution to a social issue". Mr. Gelman gave permission for his paper to be posted here.

The Steaks Have Been Raised: Making the Moo’ve to a Greener Future

In the summer of 2001, two weeks after driving up the East coast on perhaps the “best family vacation we had ever been on,” two-year-old Kevin Kowalcyk woke with diarrhea and a mild fever. The next day Kevin was hospitalized for bloody stool and dehydration. Within the week his kidneys failed, and within a month he passed away. Kevin had eaten meat infested with E. coli, produced by one of the largest agribusinesses in the country.[1] While many Americans associate cows with sprawling green pastures, the reality is much more bleak. The modern animal farm operates closer to an industrialized factory than it does to the images children regularly see. In 2007 alone, twenty-two million pounds of frozen hamburger meat, enough to make a burger for every adult in America, was recalled from stores because an E. Coli contamination.[2]. And, even though this farming system is the default in America, it is taxing on animal health, and thus the health of hundreds of millions of consumers who eat those animals.

And, over the coming years, the number of animals raised on factory farms is expected to spike. These ‘factory farms’ account for about 78% of all cattle (totaling 40 million) and 99% of all chickens (totaling 8.5 billion) sold in the United States.[3] In America, as a household’s income increases, it typically consumes more meat. By the advent 21st century, the average American was consuming nearly 200 pounds of meat annually, up 50 pounds from 1950.[4] Emerging economies, like Brazil, Russia, and South Africa, mirror this trend, but instead of increasing in sporadic communities throughout the country, meat consumption is expected to rise in entire nations. By 2050, the world agribusiness is expected to produce over 50% more meat than it did in 2010.[5] Yet, if the means of meat production remain unchanged, this rise in meat consumption will simply put the health of additional lives at risk.

The Health Externalities of Factory Farming

Factory farming is modeled to produce the most meat at the lowest cost, translating into the greatest number of animals in the smallest possible area. A grass-fed cow is usually allotted 1.5 acres of pasture,[6] terribly inefficient in the eyes of meat producers. But, with the creation of corn- and soy-derivative cow feed, farmers were given the ability keep cattle on feedlots, essentially neutralizing the need for ample grazing areas. A feedlot is where cows, after a mere six months on a pasture, arrive to be “finished,” basically a euphemism for fattening on a grain and corn intensive diet.[7] The Harris Ranch Beef Company, one such feedlot, crowds up to 100,000 cows within one square mile.[8] Not only does a corn-based diet facilitate the concentration of livestock, it also shortens the slaughter cycle allowing even more livestock to pass through factory farms.[9] Although the corn-based feed allows for a substantial increase in meat production, and thus a decrease in cost, it comes at the expense of the meat’s quality.

Even though corn is found in nature, a cow eating a corn-based diet is unnatural. Cows evolved eating grass. Grain-based diets lead to a shortened rumination cycle, or an animal’s first stage of chewing its cud. [10] Without an adequate rumination cycle, cows fail to produce enough acid-neutralizing saliva, causing a disease known as acidocis.[11] This then lowers pH levels in all four of the cows’ stomachs from the natural 7, thereby lowering the concentration of healthy omega 3-fatty acids, raising unhealthy omega 6-fatty acids, and creating a hospital environment for dangerous strands of E. Coli.[12] And, because of the extreme concentration, there is no efficient means of removing waste, leaving cows to “stand ankle deep in their manure all day long.”[13] The accumulated manure efficiently transmits disease from a single cow to large percentage of the feedlot.[14] When man attempts to assert himself over nature he is generally confronted by unforeseen externalities.

To preempt disease within the heard, farmers routinely administer antibiotics to their animals. By 2011, eighty percent of all antibiotics in America were administered to animals.[15] The widespread use of antibiotics for livestock is linked to the rise of antibiotic-resistant microbes, placing human health in danger. These “superbugs” include diseases like salmonella, which infects over 100,000 people annually, of whom about 26 die.[16] And these are only the reported cases. While Kevin was hospitalized, and eventually succumbed, to a superbug, his sister and father were also infected. Yet, their infection went unreported since they had only loose bowel movements and were not hospitalized.[17] In short, antibiotics, implemented to preempt disease in animals, foster disease in humans.

Perpetrators

Historically, the government has been both at the epicenter and conspicuously absent from the development of factory farms. Farmers only began using corn-feed because its cost was low. Responding to a food shortage in the 1970’s, the Nixon administration started subsidizing commodity crops, like wheat, corn, and soy. The markets capitalized on the low prices, finding surprising new uses for corn and soy. The crops quickly found their way into things from toothpaste to baby diapers, and, of course, animal feed.[18]

With the help of low production costs, the agribusiness grew into one of largest and most consolidated sectors in the economy. There are competing fast food chains on nearly every block New York City, but many of them share meat suppliers. In 1970, the top five beef-packers supplied twenty-five percent of the beef on the market; by 2008, the top four controlled eighty percent.[19] Thus, whenever there is threat to agribusiness, the sector regularly aligns its interests and pools its resources to mitigate the threat. According to the Center for Responsive Politics, the agribusiness is one of the biggest lobbying groups, contributing more than 381 million dollars between 1990 and 2006. This number tops the transportation lobby, 330 million, and comes close to the natural resource lobby, 384 million.[20] Therefore, it is not surprising that there was no investigation following Kevin’s passing, and that the food safety bill inspired by his memory, for years, repeatedly failed to reach Congress’ floor.[21]

Perhaps the government is only so susceptible to the lobbyist sway because the government too has a vested interest in industrialized farming. The American population is rising exponentially, and the food supply must keep up. For all the negative externalities the factory farms facilitate, they undoubtedly help lower the cost of key foods and increase their accessibility. Is it even possible to raise the quality of meat without substantially raising its cost and accessibility?

Enter BioPac’r

Fortunately, Yellowstone Compact & Commodities Corp, a small, socially conscious company located in Jackson Hole, Wyoming, has recently began manufacturing the BioPac’r, which addresses many of the issues involved factory farming and holds the potential to shift the trajectory of the industry. BioPac’r takes grass clippings and turns them into grass clipping silage, a type of cattle feed.

When compared to the grain-feed alternative, not only is grass silage a way for farmers to save money during hard times, but it is also healthier for the cattle. Instead of acidosis, negatively impacting rumination, grass silage has been linked to improving the quality of rumination because of its easily digested fiber.[22] Furthermore, grass silage-fed cows have less total fat; yet still have an increase in healthy, polyunsaturated fats, which nutritionists have recommended to increase in the human diet.[23] Besides the health benefits, cows independently gravitate towards grass silage over grain-based feeds.[24]

Grass silage is conventionally used as food reserve for cattle when pasture grass is poor, like during a dry season.[25] Making grass silage has long been recommended to small farmers, who would collect any uneaten pasture. After collection, the grass is cut into even smaller pieces and compacted to expel as much oxygen as possible, creating a hospitable environment for the bacteria responsible for the fermentation process.[26] Factory farms, though, have no pasture to begin with. By making the ensiling process as simple as loading grass clippings into a machine and waiting 30 days, BioPac’r represents the first opportunity to make this practice available on a large scale. The BioPac’r allows companies, which otherwise have nothing to do with farming, to create silage, and then provides a network to connect these companies with farmers, who otherwise lack access to grass.

Doing Well By Doing Good

Grass silage is alluring to factory farms because it increases cows’ health, while maintaining its financially viable concentration of cows. If a factory farm purchases BioPac’r silage, it does not need sprawling pastures to accrue many of the grass-fed benefits for its cows. And, because of the Department of Agriculture’s loose definition of ‘grass-fed,’ farmers would likely be able to label their meat as such.[27] Improving a product’s quality without raising its production cost is the simplest of business decisions. And, even though consumer generally associate grass-fed with free-range, having one is undoubtedly better than having none.

Meanwhile, for comparably straightforward business purposes, BioPac’r will attract grass-providing partners. The EPA estimates that landfill dumping is comprised of up to 50% yard-waste during growing seasons.[28] This can be traced to the nearly 75% of commercial lawn mowing that dispose of a combined 23 million acres worth of grass clipping into landfills.[29] The dumping runs a substantial financial cost, reaching hundreds of dollars per pick-up.[30]

The social cost of dumping grass clippings is equally high. Landfills across the United States are quickly reaching their maximum capacity, and opting to dump green waste, or organic materials that are recyclable in multiple fashions, is unnecessarily perpetuating the problem.[31] Furthermore, green waste sitting in landfills releases methane, a notorious culprit of global warming.[32] The excess grass inefficiency presents a functioning opportunity for shared value.

In order to help save on financial and social costs, environmental and gardening authorities, ranging from unpaid bloggers to Home Depot to the EPA, encourage recycling grass clippings. Beyond helping the environment, companies that portray an image of social consciousness have a business edge. A Nielson study found that 66% of consumers prefer to buy products and use services from a socially conscious companies, and nearly half of consumers are willing to pay more for such products.[33] Composting, though, has recently been linked to contaminating water sources nearby.[34] And, keeping clippings on a lawn so the lawn can reabsorb nutrients often leaves the landscape looking unkempt, offsetting a major reason people regularly cut their grass. Creating silage out of excess grass clippings, with the help of the BioPac’r, signifies a new, attractive method to stay socially conscious.

Similar to its appeal on the other side of the partnership, BioPac’r offers companies the ability to increase the profits without undergoing a major logistical change. All a company has to do is keep a BioPac’r machine on site to load the grass soon after clipping. Because BioPac’r does scheduled grass clipping pick-ups, the partner company is able to maintain its core method for disposing of its grass clippings. While landfills charge for the removal of grass clippings, BioPac’r provides the same service at no cost, and, depending on the size of the client, will often pay for the clippings. By simultaneously addressing two social issues to turn a profit, BioPac’r will quickly become textbook model of social entrepreneurship.

Opposing Stakeholders

According to Gregory Dees of Duke University, our society has an improper definition of and poor associations with the term entrepreneurship. He claims that we loosely apply it to anyone who starts a new business.[35] Drawing on Joseph Schumpter’s description, Dees says entrepreneurs do not simply create something that already existing in the current system, but rather they find totally “new and better ways of doing things.”[36] By challenge the status quo of the market and daring to dream of what does not yet exist, entrepreneurs reject the expression: ‘if it ain’t broken, don’t fix it.’ BioPac’r certainly qualifies as an entrepreneurial company. BioPac’r is envisioning healthier animal products, reducing green waste, and creating a network of shared value. But, by doing all this while turning a sizable profit, BioPac’r is also challenging the agriculture industry to rethink and confront many of its inefficient norms.

Not every company within agribusiness is committed to moving the status quo of the industry for the better. Monsanto, the largest corn and seed producer in the world, has all but dictated the change and direction of agriculture over the past three decades.[37] David Friedberg of Climate Corp. calls Monsanto “as innovative and as impressive as Google.”[38] Monsanto has engineered crops to grow quicker, bigger, with less water, and fewer fertilizers.[39] Its innovation, though, is no indication of its corporate benevolence.

As the "Third Most-Hated-Company in America", Monsanto has stayed wildly profitable, in part, because of its history of ruthless treatment to anyone standing in its opposition.[40] Organic farmers once accused Monsanto of polluting their crops since Monsanto pollen, blown onto the organic fields from neighboring ones, essentially killed all the existing organic crops, and tainted the richness of land associated with organic farming. Monsanto’s response: sue the organic farms for infringement of intellectual property.[41] With seemingly endless resources and an army of lawyers, perhaps Monsanto will see to the demise of BioPac’r, even that is by means of drowning the small company in legal fees. BioPac’r is taking the first step to reduce the emphasis on corn, and thus Monsanto, in agribusiness, potentially providing a new model of sustainability for companies in different areas of the industry.

Borrowing a Business Model

Even though BioPac’r lacks the sufficient funds necessary to contest with Monsanto, it does have other resources it can leverage, namely, the media. By virtue of being an exciting, new company BioPac’r is a cover story waiting to happen. Unfortunately, a revolutionary company is no longer enough to generate media buzz, especially if the company is in its early stages of production and lacks the adequate marketing expertise. In this regard, the small company will welcome Monsanto’s impending attack. As Tom Szaky did when Miracle Grow launched a lawsuit campaign to end the young, socially responsible fertilizer company, Teracycle, BioPac’r can essentially utilize Monsanto’s destructive energy and transform it into a productive force[42].

By attacking BioPac’r, Monsanto presents an opportunity for BioPac’r to enlist the best legal help and the most efficient marketing for its brand—at no cost. To capitalize on the opportunity, BioPac’r simply has to alert the media about the hostile situation. This past April, the New York Times ran an article featuring the current cultural obsession with bullies.[43] The Goliath, Monsanto, trying to crush the defenseless David, BioPac’r, is an underdog narrative sure to boost any ratings. The story would grab headlines across a myriad of news outlets. In the extensive coverage, more people, including potential partners, will learn BioPacr’s name, story, and mission. Further, the story would reinforce consumer’s image of Monsanto as an evil brand, pressuring the company to drop any charges. Monsanto would only launch the assault to protect itself against a potential threat, but a decrease in brand popularity will likely lead to current clients searching for alternatives. Thus, an attack on BioPac’r would cause a potential problem to materialize.

Partnering With Panera

Without the free marketing from Monsanto’s lawsuit to bring its name into the agricultural conversation, BioPac’r will have to actively search for an established partner to sell beef fed its grass silage. Between its staunch commitment to social responsibility and opportune timing, if any company would be willing to partner with BioPac’r, it would be Panera.

Panera already is in the forefront of a movement to bring consumers natural an healthy ingredients. Panera is actively fighting for GMO transparency, cage-free eggs, and free-range animals. In its annual Animal Welfare report, Panera has outlined a plan describing how it will serve only free-range chickens by 2020.[44] While the 89% of grass-fed, free-range beef it serves is impressive, the report lacks any statement regarding a move to increase that number to 100%.[45] One can reasonably assume Panera is struggling with the economic and logistical viability of increasing the 89%. However, this remaining 11% is an ideal number to experiment with an innovative solution. Partnering with a farm that uses the grass silage from BioPac’r to feed their cows is a naturally outgrowth of Panera’s dynamic, socially responsible model.

Not only would the solution be socially responsible, but it would also create value for its shareholders. Danny Meyer and Union Square Hospitality repeatedly appear in the news not necessarily because their restaurants provide excellent food, but rather because of their revolutionary industry approach.[46] Panera is one of the few companies that already have experience with this approach. As it did when it created the pay-as-you-go café chain, Panera would make headlines by using BioPac’r meat. The food company would become ‘leaders,’ ‘fools,’ ‘visionaries,’ ‘risk-takers,’ and countless other titles. Whatever you call the fast-casual chain, Panera will be the subject of discussion. But to capitalize on all the economic benefits BioPac’r could offer, Panera would have to act quickly.

Staying Atop the Market

Chipotle, perhaps Panera’s main competition, prides itself on “food with integrity,” yet that slogan has recently been called into question. Over the past few months the fast-casual chain has been receiving frequent reports of E coli. outbreaks. Even though Chipotle is currently in unwavering pursuit of only providing grass-fed and free-range beef, between the issues with food safety and its accompanying negative media attention, Chipotle is currently portrayed as out-of-line with its supposed mission—and consumers are noticing. For the first time since its inception in 2006, Chipotle reported a quarterly loss.[47]

When one’s competition falls, he enjoys a relative increase in status, simply by maintaining his current position. Chipotle, though, is working to restore its image, and thus the previous balance of power. In hopes of regaining customer loyalty, Chipotle has offered “Free Burrito Day.” Furthermore, it has chosen a day to open its doors late, to thank its workers for the extra time they invested implementing more extensive food safety regulations.[48] At this rate, Chipotle will once again be one of America’s favorite eateries. Thus, if Panera intends to maintain its elevated status, it must announce its partnership with BioPac’r technology as soon as possible, seeing as this opportunistic time frame is limited. The announcement would draw a comparison to Chipotle, where Panera would appear in better light. For example, one reason Chipotle is able to provide such a high percentage of grass-fed, free-range beef is because it heavily imports the beef from Australia.[49] However, using beef raised with BioPac’r silage allows jobs to stay in the United States since the company does not have to seek endless pastures. Panera would suddenly become the promoter of a healthier domestic industry. The innovative announcement would grab headlines, thereby capturing free marketing and, more importantly, distract the public from Chipotle’s efforts to restore it image.

Conclusion

In lowering the cost and increasing the accessibility of meat, the farming system began producing unhealthy cows, and thus providing unhealthy beef to consumers. Through increasing the availability of grass silage, BioPac’r allows factory farmers to increase the quality of lives of their animals without having to compromise financially. And, because farmers can maintain their current model, consumers will have access to healthier meat at the same low cost. Further, with the right marketing strategy, BioPac’r can leverage the media to fend off potential opposition, and to recruit partners. The partners can then use the media to create buzz, painting themselves as innovators and forward thinkers, terms aptly labeled to BioPac’r. BioPac’r even uses another existing social problem, green waste, as the core of its solution. In reaffirming the finical viability of agribusiness, the private sector succeeds where the government sector fails.

However, what makes the BioPac’r a viable option is also why, in many ways, it is not a satisfying solution. Despite increasing the quality of factory farm meat, the BioPac’r does not fully address why the current standard for meat is so low. By maintaining the preexisting model of factory farming, Americans and their policy makers are not forced to confront issues like over consumption and animal welfare. The BioPac’r, though, is definitely a step in the right direction. And, while the partnership with Panera is only temporary, seeing as the grass silage model is a simply a placeholder while Panera finds a viable solution to serve 100% free-range, grass-fed beef, it may begin a national conversation that comes to ask how and why there was such an accessible market in which the BioPac’r could operate. Furthermore, the hope is that a fast-food company, like McDonald’s, finds inspiration—either social or financial—in Panera, and partners with farms using BioPac’r silage, thereby moving the national default towards a more sustainable future.

David Foster Wallace, in his commencement speech to Kenyon College, defines blind certainty as “a close-mindedness that amounts to an imprisonment so total that the prisoner doesn’t even know he’s locked up.”[50] Sometimes, an issue becomes so ingrained within our culture that we forget it is an issue altogether. We may shrug our shoulders in acceptance, and, in turn, shift our awareness to the good it produces. Because mass food production is not leaving our society any time soon, many acquiesce to the social costs involved. And, as we turn our attention to dollar menus across the nation, we may forget that these benefits are products of a compromise. By suggesting an alternative solution, like more natural feed for cows on a factory farm, businesses represent an ability to force us to confront our personal and cultural assumptions.

Share this:

Cart

Grass-2-Cash

We at Yellowstone Compact & Commodities are creating an entirely new commodities market that is Horticultural based, justified by University Research in partnership with Agriculture. The BioPac'r converts lawn clippings into High Octane Grass, for your Cows, it's called Lawn Clipping Silage. Follow our Blog below.

Subscribe to our Blog via Email

Enter your email address to receive notifications of new posts by email.